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Juno Tenders $250M Follow-on Public Offering of Common Stock

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Juno Therapeutics, Inc.'s shares dropped more than 7% after the company announced that it has launched a proposed $250 million follow-on public offering of 6.1 million shares of common stock at $41 per share. The offering, subject to customary closing conditions, is expected to close on Sep 26, 2017.

The underwriters have been granted with an option to buy up to 0.9 million additional shares within 30 days to cover over-allotments. The completion or the actual size or terms of the offering were not made public by the company.

Notably, after the offering gets completed, Juno plans a private placement of 0.7 million shares to a subsidiary of Celgene Corp. (CELG - Free Report) at $41 per share.

Juno’s shares have significantly outperformed the industry so far this year. The stock has soared 120.8%, while the industry has registered a rally of 15.7%. 


The company is expected to generate net proceeds of $277.1 million from the public offering before deducting underwriting discounts and commissions. However, including the underwriters’ option to purchase additional shares, the gross proceeds are estimated to be $318.7 million.

Juno plans to utilize the net proceeds of the offering for general corporate purposes including working capital requirement.

We remind the investors that the company has a 10-year agreement with Celgene for global development and commercialization of immunotherapies. In addition to making an upfront payment of about $150 million, Celgene bought 9.1 million shares of Juno’s common stock at $93 per share.

The collaboration will see the companies leveraging T cell therapeutic strategies to develop treatments for patients with cancer and autoimmune diseases. The initial focus will be on CAR-T and T-cell receptor technologies. The deal is a major positive for Juno, given a strong partner in the form of Celgene.

Also, Juno’s agreement with MedImmune, a subsidiary of AstraZeneca (AZN - Free Report) , will give the company the much-needed experience in combining CAR T-cells with a checkpoint inhibitor — MedImmune’s PDL-1 antibody durvalumab.

Zacks Rank & Stock to Consider/Key Pick

Juno currently carries a Zacks Rank #4 (Sell). A better-ranked stock in the pharma sector is Aduro Biotech, Inc. (ADRO - Free Report) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Aduro Biotech’s loss per share estimates reduced from $1.46 to $1.32 for 2017 and from $1.41 to $1.24 for 2018 over the last 60 days. The company delivered positive surprises in two of the trailing four quarters with an average beat of 2.53%.

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